Property Tax Levy Cap with Truth in Taxation Override

States curtail the ability of local governments to increase property taxes through three common mechanisms: limitations on increases in tax rates, assessed values, and tax levies. Some states also require full disclosure to the public of any changes in the tax rate. Many states allow the local jurisdictions to override the limit by majority vote of the electorate or some other mechanism. This table provides the limit names and types adopted by each state, the terms of each limit and a description of the override process. The initial construction of this table relied heavily on the ACIR report produced by Daniel Mullins and Kimberly Cox (1995). Scholars using our table to do research on tax limits should also cite their work as foundational in the field (Mullins, Daniel and Kimberly Cox. 1995. Tax and Expenditures Limits on Local Governments, M-194, Washington, DC: Advisory Commission on Inter-Governmental Relations.)

Levy increases are limited to the lesser of the rate to generate the same revenue as the prior year, which is called the effective rate, or the rollback rate. The rollback rate is the rate sufficient for an 8% increase in the amount levied for maintenance and operations and to cover debt service. The rollback rate for school districts allows districts to add $0.04 to the lesser of the compressed operating rate or the effective maintenance and operations rate.

Override Process:

School districts must hold an election to ratify a tax rate above the rollback rate.
For other taxing units, to exceed either the effective rate or the rollback rate, the political subdivision must provide public notices and hold public hearings. The notice must include taxes imposed on the average residence homestead using the effective tax rate and the adopted rate.

Footnotes:

This limit went into effect for counties, municipalities, and school districts in 1982.
If a taxing unit other than a school district adopts a tax rate that exceeds the rollback rate, voters may petition for an election on the tax increase. A successful election limits the the current rate to the rollback rate.

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